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Important elements of a partnership agreement

On Behalf of | Jan 26, 2023 | Business Law |

Deciding to open a business with a partner requires you to outline each person’s rights and responsibilities. The best way to do this is with a partnership agreement or contract.

However, when creating the partnership agreement, it is essential that you include the right information. Learn more about what should be included to protect yourself here.

Each party’s responsibilities

Put each person’s responsibilities in writing. Doing this will help you avoid arguments or disagreements about what should be done. Make sure to be as concise and thorough as possible. If the responsibilities change at some point, be sure to update your partnership agreement.

Financial matters

The purpose of starting a business is to make money. Unfortunately, disagreements about money have caused many businesses to fail. You can avoid this outcome by outlining how funds and profits are allocated in the partnership agreement. Be sure to include how losses will be handled.

What happens if one partner leaves

At some point, you or your partner may decide to leave the business. If this is the case, you need to have a plan in place. Failure to plan for this occurrence may critically injure your business’s ability to continue operating.

Dispute resolution

Regardless of how good of a relationship you and your partner have, you may only agree about some business matters all the time. If a disagreement does occur, be sure your partnership agreement outlines your dispute resolution options.

Protecting your business

As a business owner, you work hard to achieve success. If you are entering a business with a partner, be sure you have an ironclad, concise partnership agreement you have agreed to and signed. Knowing the ins and outs of making this legal is smart, so be sure to do your homework.